Big Sur Bakery’s owner and landlord negotiate to settle a court dispute and consider a possible sale.

The legal battle that began in summer 2024 between the owner of Big Sur Bakery and the landlord of the property, after a blaze destroyed the business, may soon be resolved, according to court documents, with a mediation session slated for later this month.

In the late afternoon of Friday, May 3, 2024, a fire was reported at Big Sur Bakery, owned and operated by Michael Gilson since the 2000s. Although firefighters responded to the call within minutes from their post behind the bakery, and were able to stop the blaze from spreading, they were unable to salvage the restaurant. The longtime Highway 1 gathering place was destroyed.

Roughly a month after the incident, Gilson received notice from property owner Hillary Lipman that the lease for the building was terminated due to the fire.

Soon after, Gilson filed a lawsuit in Monterey County Superior Court against Lipman and his son, Blaise Godbe Lipman, who operates Loma Vista Gardens on the property. The suit claimed that a fire or other act of destruction was not a cause for terminating the lease agreement. It also alleged that the property owner interfered with the bakery’s operations and violated Monterey County codes by operating an unpermitted mini-mart on the premises, among other complaints.

In response, Lipman filed a cross-complaint in August 2024 against Gilson and John Harry, a former employee of the bakery. He alleged that Gilson breached the lease agreement by making unauthorized alterations to the premises without written consent – including the addition of gas lines and pizza ovens – and failing to provide proof of fire insurance, as well as failing to restore the premises to substantially the same condition as it was before the fire.

The complaint also alleges that Gilson and Harry were negligent because the baker failed to detect the build-up of propane before igniting the oven, which ultimately resulted in the blaze. According to Lipman’s attorneys, the cost of the damages caused by the fire amounts to roughly $3.2 million.

In June 2025, the two parties and their attorneys engaged to mediate and began working on a settlement agreement. After that, according to court documents, Lipman and Gilson began an informal discussion about potentially selling the property from Lipman to Gilson. However, because Lipman’s son operates a wedding destination business on the property, a new disagreement arose between the parties. Because of that dispute, attorneys have tentatively agreed on another round of mediation, set to occur between Jan. 21-23, where a “hoped-for resolution” can possibly be reached before a trial date scheduled for Feb 2.

Gilson says he hopes the bakery is someday reestablished. “It is my hope, and the hope of many others, that Big Sur Bakery will return one day in the not too distant future to its home of nearly a quarter-century at Loma Vista,” he says. “Hopefully the goodwill associated with this settlement will help move the needle in that direction.”